08/09/2023
"India can look up to Japan?
The economic performance of Japan in the 1970s offers valuable guidance for India rather than relying solely on the happenings in the US. While the US dollar's influence is significant globally, other economic factors come into play.
In the 1970s, the American markets provided zero percent returns due to various reasons, including the removal of the dollar from the gold standard by Richard Nixon in 1971. Additionally, geopolitical conflicts and political crises caused oil prices to surge, with the price of oil increasing over tenfold throughout the decade.
In contrast, Japan managed to stabilise its economy despite facing higher oil prices than the US. Japan's economic miracle began in the mid-1950s, with remarkable growth rates of 9-10% in the 1960s.
The country successfully navigated the oil shock of the 1970s by pivoting its economy away from heavy industries towards light industries such as electronics and automobiles.
Japan's ability to reduce its dependency on oil and its successful economic diversification contributed to its sustained growth during the period.
India, with its service-heavy economy, can draw parallels from Japan's experience. Services constitute around 50% of India's GDP, with the financial industry representing a significant portion of the stock market. India's financialization of historical wealth and its growing role as a service exporter position it for significant growth.
The country's service market is expected to expand as it fills the labour gap in the Western world, which is currently facing a rampant labour shortage.
In summary, India can look to Japan's economic trajectory in the 1970s as a guide for its own development. India's emphasis on services, particularly in the financial industry combined with its potential to meet the labour demands of the Western world, presents opportunities for substantial growth and the emergence as a major player in the global service market.
